Moving up the value chain has been an aspiration for Indian IT brands for quite sometime now. Now it may well be deemed an unavoidable necessity!
While sharing his views on the concept of justice in the Indian context, Nobel prize winning economist, Amartya Sen, shared an interesting anecdote with us to hilarious effect. This was when his car stopped at a traffic signal, and one of the vendors at the signal came up to his car, attempting to sell Sen’s own book to him. The boy exclaimed, “Please buy it Sir. It is cheap and best!” Sen also went on to remark, rather self-deprecatingly, that this is what he always wanted to be – cheap and best!
Coming to the context of India Inc. in the global milieu, Sen’s words will strike a chord for sure. After all, wherever Indian companies have seen a larger role for themselves beyond their home market, the most critical competitive advantage they have sought to exploit is the cost advantage. ‘Cheap’ and ‘Indian’ seem to be almost synonymous (best, meanwhile, is a relative term) as a result; and Indian firms have just about mastered the frugal engineering mantra, in sectors as diverse as steel, telecom, pharma, auto and textiles. Of course, this is most relevant in the context of Indian IT, which is India Inc.’s most phenomenal success story till date. For years, Indian IT companies have taken up opportunities for cost arbitrage and have developed newer capabilities in the IT domain, wherein they could capitalise on the arbitrage as best as possible. How companies like Infosys, Wipro and TCS became the new age industrial giants in the process is well known.
Even though the ‘cheap’ label does make us cringe at times, criticism of this approach is both logical and illogical, depending on the period that you consider for your assessment. Till the 1990s and the early years of this century, this was the best foot they could put forward, at a time when the lower end of the IT ball game was a blue ocean of sorts, and they had the right fishing gear! They did it brilliantly then; no question about that. But while it is important to know when it is the right time to latch on to a particular business strategy, it is equally important to know when to let go. And with the Indian IT sector, the time to let go is coming sooner than anticipated. Moving up the value chain has been a desirable and aspirational business approach for quite some time, but it may not be too far-fetched now to deem it a necessity. The lingering questions that now come to mind are why, when and yes...how?
While sharing his views on the concept of justice in the Indian context, Nobel prize winning economist, Amartya Sen, shared an interesting anecdote with us to hilarious effect. This was when his car stopped at a traffic signal, and one of the vendors at the signal came up to his car, attempting to sell Sen’s own book to him. The boy exclaimed, “Please buy it Sir. It is cheap and best!” Sen also went on to remark, rather self-deprecatingly, that this is what he always wanted to be – cheap and best!
Coming to the context of India Inc. in the global milieu, Sen’s words will strike a chord for sure. After all, wherever Indian companies have seen a larger role for themselves beyond their home market, the most critical competitive advantage they have sought to exploit is the cost advantage. ‘Cheap’ and ‘Indian’ seem to be almost synonymous (best, meanwhile, is a relative term) as a result; and Indian firms have just about mastered the frugal engineering mantra, in sectors as diverse as steel, telecom, pharma, auto and textiles. Of course, this is most relevant in the context of Indian IT, which is India Inc.’s most phenomenal success story till date. For years, Indian IT companies have taken up opportunities for cost arbitrage and have developed newer capabilities in the IT domain, wherein they could capitalise on the arbitrage as best as possible. How companies like Infosys, Wipro and TCS became the new age industrial giants in the process is well known.
Even though the ‘cheap’ label does make us cringe at times, criticism of this approach is both logical and illogical, depending on the period that you consider for your assessment. Till the 1990s and the early years of this century, this was the best foot they could put forward, at a time when the lower end of the IT ball game was a blue ocean of sorts, and they had the right fishing gear! They did it brilliantly then; no question about that. But while it is important to know when it is the right time to latch on to a particular business strategy, it is equally important to know when to let go. And with the Indian IT sector, the time to let go is coming sooner than anticipated. Moving up the value chain has been a desirable and aspirational business approach for quite some time, but it may not be too far-fetched now to deem it a necessity. The lingering questions that now come to mind are why, when and yes...how?
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Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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